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Customers
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October 2, 2006
Dear Armstrong Customer:
Today Armstrong emerged from Chapter 11.
Our Plan of Reorganization provides for a comprehensive resolution of our asbestos liability – a significant achievement that
was the primary goal of our Chapter 11 reorganization.
During our time in Chapter 11, we not only resolved our asbestos liability, we also transformed our businesses. We restructured
our flooring business to make it more competitive. In addition, we made substantial improvements in our cost structure by
closing several plants and streamlining our workforce in the U.S. We also expanded capacity to manufacture wood flooring,
broadened our product lines and improved product quality and customer service.
These improvements have helped produce several consecutive quarters of improved financial performance. In the second quarter
of 2006, we nearly doubled our operating income from a year ago. For the first six months of 2006, our operating income increased
to $120.7 million (compared to $44.3 million for the first six months of 2005).
We expect to receive commitments for a total of $1.1 billion in a senior credit facility, including: (i) a $300 million revolving
credit facility; (ii) a $300 million term loan with a five year maturity; and (iii) a $500 million term loan with a seven
year maturity. The Revolving Credit Facility is immediately available to support our ongoing liquidity needs. Both term
loans are expected to be funded on or about October 16.
We are emerging with no asbestos liability in the parent company, less debt and a stronger balance sheet than when we filed
for Chapter 11 six years ago. Our solid capital structure, combined with our recent financial performance, means the company
is on a strong financial footing with good prospects for growth and profitability going forward. Our top priority will continue
to be providing our customers with the outstanding quality products and service you have come to expect from Armstrong.
We are excited about the future of Armstrong, and we look forward to continuing our business relationship for many years to
come.
Thank you for your loyalty to Armstrong.
Sincerely,
Michael D. Lockhart
Chairman and Chief Executive Officer |
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